Mozambique: Gas discovery in onshore area PT5-C

South African oil company Sasol has recently announced the discovery of natural in area PT5-C, located in the southern part of Inhassoro District, Inhambane Province, Mozambique. This discovery was made following the drilling (between 25 March – 5 April) of the Bornito-1 exploration well which reached a maximum depth of 1934 meters in lower cretaceous sediments. This was the second well drilled in the area, and the first successful as the first drilled well – Dourado-1 – did not find any hydrocarbons.

The following is a brief summary of some key legal and contractual terms which support the PT5-C license:

• The license was given under “Concession Agreement for Exploration and Production” signed on 17 October 2018 following Mozambique’s 5^th Licensing Round.
• The concession holders are Sasol Mozambique PT5-C Ltd, the operator with a 70% participating interest, and Mozambique’s parastatal oil company Empresa Nacional de Hidrocarbonetos, E.P. (ENH) with a 30% free carry interest.
• The concession area has a size of about 3012 km2 and is located between the Pande and Temane fields.
• The discovery was made within the first exploration sub-period which has a maximum duration of 48 months. A second and third exploration sub-periods will follow, with a maximum duration of 24 months each, for a total exploration term of 8 years.
• The minimum work commitments for the exploration period are as follows:

First sub-period (48 months):

• Acquisition of 1.600km of 2D seismic data
• Drilling of 2 exploration wells
• Seismic studies worth a minimum of USD 5 million

Second sub-period (24 months):

• Drilling of 1 exploration well
• Seismic studies worth a minimum of USD 5 million

Third sub-period (24 months):

• Drilling of 1 exploration well
• Seismic studies worth a minimum of USD 5 million

Cost recovery is capped at 60% of Disposable Petroleum (Cost Petroleum).

• Profit Petroleum is shared between the Government and the Concessionaire in accordance with the following scale:

• Production Bonuses are due to be paid by the Concessionaire to the Government at the following events: